The Top Ten Kinder Morgan Myths — BUSTED!

For a special episode of the Dogwood Podcast, Sophie Harrison tackles ten myths about Kinder Morgan’s expansion proposal, with the help of expert guests.

We chatted with Robyn Allan (economist and former ICBC CEO), Marc Lee (senior economist at the Canadian Centre for Policy Alternatives) and Professor Jocelyn Stacey (UBC’s Peter Allard School of law). Here’s what they had to say:

Tidewater access at the Westridge dock has existed since 1956. Kinder Morgan bought the pipeline in 2005. They’ve had years to find Asian markets for Alberta’s oil. And yet, in 2016, none of the tankers from Kinder Morgan’s Westridge terminal went to Asia. They all went to U.S. markets.

We’ve all heard it. Because Canada’s oil is landlocked (see above) and can’t get to Asia (see above) — we’re stuck selling our oil at a discount to the U.S.!

Well, this hasn’t been true for many years. Canada’s heavy crude is a lower-quality oil. It’s more expensive to refine. That’s why there’s a natural discount between Western Canada Select (the benchmark for Canada’s heavy crude) and West Texas Intermediate (the American benchmark).

The National Energy Board expects this natural discount to be about $20/barrel. Well, right now Alberta’s oil is selling at more like $9/barrel below WTI. That means, as Robyn Allan put it:

“We in fact have a very healthy premium price for our heavy oil in North America right now.”

Where did this myth come from? During the Enbridge debate, one CIBC analyst cited a number — $50 million a day — that the Canadian economy was losing by selling our oil at a discount. There was no analysis to back it up, and it has since been thoroughly debunked.

But still the idea keeps on getting repeated by politicians and industry. Robyn Allan went as far as to call it “propaganda.”

There was maybe an argument for this five years ago, before the oil price tanked. Now? Not so much…

Tar sands producers don’t need more pipeline capacity to maintain current production levels, only to enable even further expansion. But oil prices are now critically low, Alberta has capped on oil sands emissions, and industry analysts worry about a pipeline overbuild. In the current economic environment, few new tar sands extraction projects are coming online. Oil majors like Shell and Statoil are pulling out of the tar sands already.

It’s time to stop desperately trying to ship out more carbon-intensive raw resources, and instead have a real conversation about the new steps for Canada’s economy in the 21st century.

Canada is trying to have its cake and eat it too. But in the end, increasing pipeline capacity to get more tar sands oil to market is a clear contradiction to Canada’s promises under the Paris Agreement.

The upstream emissions from tar sands expansion pose a major and unresolved challenge to meeting even Stephen Harper’s 2030 climate target. And by proposing to extract an unfair share of the global carbon budget, Canada’s oil economy is making a dangerous economic bet on catastrophic climate change.

B.C.’s government does not have the power to reject Kinder Morgan outright. However, B.C. does have a clear responsibility to respect the Constitutionally-recognized rights of Indigenous peoples. The Province also has a clear responsibility to look after the health and safety of its residents — and the ability to set up processes or enforce conditions accordingly.

Trudeau’s government could launch their own legal challenge against B.C. for any actions the province takes, around respecting First Nations right or defending local health and safety. (A risky move politically if we’ve ever heard one!) Then, as Professor Stacey says, “the courts will have to resolve that, because there are conflicting interests at stake.”

Look, it makes sense that investors want certainty. But here’s how Professor Stacey put it: “We live in a federal state, we live in a colonial state, and so there’s inevitably going to be some sort of uncertainty to ensure that interests are protected… when you have interests that are colliding between different provinces, different First Nations.”

Interestingly, virtually none of these pro-pipeline rule of law arguments mention the rights of First Nations. Section 35 of the Constitution recognizes and affirms these rights in the “supreme law of Canada.” So we won’t even know if the initial federal or provincial approvals were legal until the courts rule on whether those rights were violated.

Further, Professor Stacey adds: “I would argue the federal process for approving the pipeline, when you think back to the flawed NEB process or the Ministerial Panel that was put in place afterwards, that those processes themselves have actually violated the rule of law.”

“There was a lot more that could have been done up front, by the federal government, by the provincial government to ensure that these requirements were met up front… We’re now just experiencing what happens when those processes aren’t in place.”

9. This project was approved based on a rigorous, evidence-based review process.

The actual facts of the matter are this: Justin Trudeau knew when he was running for office that the National Energy Board process was broken. So he promised to redo their review of Kinder Morgan’s Trans Mountain proposal. Then he broke that promise — and never explained why.

Instead, we got the slapdash additional Ministerial Panel hearings. The panel produced a report with a bunch of outstanding questions, which Prime Minister Trudeau proceeded to ignore before approving Kinder Morgan’s project in November.

B.C.’s Premier Christy Clark, previously opposed to Kinder Morgan’s tanker proposal, greenlighted the project based on the same flawed NEB review, which systematically underestimated the environmental and economic costs while relying on industry numbers to overstate the economic benefits.

Let’s not forget that Kinder Morgan’s pipeline and tanker expansion is an effort to increase oil production. We community organizers and concerned citizens aren’t proposing to stop the tar sands overnight; saying no to Kinder Morgan is merely saying no to further expansion of this industry.

Dogwood’s Christina Smethurst put it best:

“It’s like saying, if I drink alcohol then I can’t possibly fight liver cancer… I live in a world that was not designed by me, but I’m trying to design a world for the future.”

11 Responses to “The Top Ten Kinder Morgan Myths — BUSTED!”

A marine spill cannot be cleaned up. Under ideal conditions the best they can do is <15% recovery. No amount of money thrown into the Protection Plan for "world-class response" changes that. Winds, currents, storms, waves and tides make this impossible. Eventually Dilbit will submerge and some will sink.

Nice piece, but I wish you had said something more about the danger to Burnaby, which is all too real. Just ask the Burnaby Fire Department, world expert Dr. Ivan Vince, SFU… There were holes in KMs risk projections for the Burnaby facilities you could drive a tanker-truck through. The NEB ignored them. We need a proper assessment of the risks – of a boil-over event, a vapour cloud fire, and so on. Every year there are disastrous fires at oil facilities somewhere – but they aren’t situated in major urban areas. Only in Canada! See https://www.youtube.com/watch?v=tOyceZiLF-Y

Hi Bob, Quite right — the threat to Burnaby neighbourhoods is all too real. But, as far as we know, there isn’t much myth around that. The myths we were looking to address are those that are repeated over and over in the media and in our inboxes. But thank you for bringing up this up as an important point. There are so many dangers and drawbacks to this project, we probably could have listed 100… Cheers! Christina

Bob is correct. In addition, in a large spill situation the volatile components will actually create a dangerous situation for First Responders (and near shore residents,businesses) and will significantly delay the response and access to the spill. In the meantime, the spill spreads and begins to submerge as the lighter fractions evaporate.They claim a “quick”response” will be done, but it has to be within 2 hrs – impossible in this situation. This will trigger an evacuation of large areas of nearshore impacted areas.

It isn’t that they would transport “oil” by rail (which would actually not be “oil” but “dilbit”) if there isn’t enough pipeline capacity. What they would transport is “bitumen”. Bitumen is a solid with similar flammability to coal which is shipped all over the place by rail without any explosive incidents. Bitumen needs to be liquefied to be sent down a pipeline, which means turning it into “dilbit” by adding naptha or similar chemicals. At that point it is relatively flammable and comparable to other liquid oil products.

But why liquefy it to put it on rail cars? That would add weight and waste space (the standard assumes dilbit is about 33% naptha which itself is very flammable and that makes dilbit very flammable). Transporting solid bitumen (aka: “neatbit”) on trains would make far more sense, especially since, if the market is to be China or Asia, all refining would take place over there anyway. This would save them either selling the naptha as part of the product (in which case more would need to be produced or purchased and imported from the US), or having to separate the naptha from the dilbit to send back to Alberta for reuse, reducing pipeline capacity as it is then filling a pipe going the opposite direction.

For these reasons I have to assume this whole “sending dilbit by rail is dangerous” is a bogus threat because it simply would not be done that way in any logical system.

This is great fact based information to get out to the larger public. Thanks..

Perhaps worth a mention is the fact that Westridge terminal is not in the harbour of Vancouver itself but in Burnaby. From Vancouver harbour, tankers need to traverse under 2 additional bridges and navigate through a narrow channel to get to Westridge. And it can only happen in the 2 times 20 minute windows a day when there is slack tide otherwise these huge tankers could run aground. The chances of an accident go up exponentially when access is so restricted and so tight.

You’re not addressing the most important issue here. Building Kinder Morgan is a national unity issue and I believe that’s why Justin Trudeau approved the pipeline. I’d rather not see it built either but if no pipelines are approved, Albertans will be up in arms. They still haven’t forgotten the NEP instituted by Trudeau senior. I don’t blame the Prime Minister for approving the pipeline because despite the fact that he is in my belief, pro climate, he’s also Prime Minister for the whole country including Alberta and I think we’re very fortunate that Rachel Notley is the Premier of Alberta, otherwise, there would have been a Brad Wall in Alberta too opposing a carbon tax and demanding even more pipelines. The goal should be to change the attitudes of Albertans and steer their economy away from oil production.

Their rhetoric surrounding increased tax gains is another falsehood. I refer to expose of convoluted corporate layering by Kinder Morgan by economist Robyn Allan at http://www.commonsensecanadian.ca
A thorough debunk of Kinder Morgan claim that this project will significantly add to provincial and federal tax coffers.
Once again, smoke and mirrors.

Canadian oil producers can use U.S. port facilities to export Canadian heavy crude oil to countries other than the U.S.
Globe and Mail, Nov. 02, 2014, “Oil sands crude reaching Europe, Asia”:
“Canadian oil has travelled through the United States to ports in the south, such as Houston/Galveston and New Orleans. From there, it is loaded onto tankers and shipped abroad. Among the destinations: Spain, Italy, Singapore, and in increasing volumes, Switzerland according to the U.S. Energy Information Administration (EIA). Such exports hit a peak of 874,260 barrels in total in July, before falling back to 346,921 in August…The re-exports have become a relief valve for both countries by reducing some congestion of supplies within the U.S.
“We’ve got so much rail capacity now and pipe capacity is really starting to come on line, especially heading down to the U.S. Gulf,” said Martin King, analyst at FirstEnergy Capital Corp. “One way or another, the market’s figured out a way to get Canadian crude to a country other than the U.S.”
Tidal Energy Marketing Inc., a unit of Enbridge Inc., is one company that has shipped Canadian crude from the Gulf Coast, sending a cargo to Spain in May.
Last week, Bill McCaffrey, chief executive of oil sands producer MEG Energy Corp., said his company is considering such exports as it becomes easier to move Canadian crude to Houston through expansions of the pipeline network.
Meanwhile, Suncor Energy Inc. is exporting crude via tankers loaded at Sorel-Tracy, Que.,on the St. Lawrence River. Suncor chief executive Steve Williams said last week that the volumes are not large, but key markets for the supply are the U.S. East Coast and Europe, depending on the economics of the day.”

Since that article was published the economics have drastically changed. Oil prices have collapsed, and the differential in price between the WTI and Brent, which could have been a way for Canadian oil producers to get a better price on the international markets for their crude, has shrunk to less than US$2.
NEB, 2015 Oil Exports and Imports, Summary: “In 2015, most of Canada’s crude oil exports were destined for the U.S. There was a marked decrease in Canadian crude oil exports in 2015 to Non-US markets, shrinking year-over-year from 2.8% of market to roughly 1%. Canada had an almost complete reliance on the US market for its crude exports. The large increase in crude oil exports to US PADD III (US Gulf Coast) market was due to new pipeline capacity.”
Canadian oil producers still can use U.S. port facilities to export their oil to other countries, but now they have another major competitor on world markets, the United States.
EIA, March 28, 2017, Today in Energy: “Following the removal of restrictions on U.S. crude oil exports in December 2105, the U.S. exported crude oil to 26 different countries in 2016, compared with 10 countries the previous year. In 2015, 92% of U.S. crude oil exports went to Canada, which was exempt from U.S. crude oil export restrictions. After restrictions were lifted, Canada remained the top destination but received only 58% of U.S. crude exports in 2016.”
The reality is that Canadian oil producers can’t really compete against the other major oil producers around the world, and building access to tidewater in Canada West Coast or East Coast won’t change that reality.

um what are you nuts most of the people in BC has said they do not want another pipeline not ever so how is building a pipeline a matter of national unity i could see it as a matter of duty for us to stand in unity with the first nation people here in BC against the pipeline i really dont see how building a pipeline could be a national issue because simply put pipelines dont help the nation

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